Student-Loan Borrowers Reluctant to Make Big Purchases

Younger people struggling with the burden of student-loan debt appear to be avoiding borrowing for a home or car, according to a recently released study.

The median age for first-home purchasers historically has been about 30, with home ownership rates significantly higher for 30-year-olds with student debt because this population tends to have higher education and income levels.

But the recession and the subsequent rise in student-loan debt delinquencies appear to have flipped this trend, according to a study by Meta Brown, a senior economist in the research and statistics group of the Federal Reserve Bank of New York, and Sydnee Caldwell, a senior research analyst in the same group.

By 2012, for the first time in at least a decade, 30-year-olds with no student loan history were more likely to have home-secured debt, the study found.

It found a similar trend with auto debt.

Total student loan balances have tripled in the past eight years as more people borrow to meet the cost of higher education.

According to the New York Fed data, 43 percent of 25-year-olds had student loan debt in 2012, up from 25 percent in 2003. Americans now owe about $1 trillion in student loan debt.

Delinquency rates have also surged, as the recession's lingering effects make it difficult for new graduates to find jobs. The New York Fed recently said that about 6.7 million borrowers—out of a total 37 million—are at least 90 days delinquent.

A number of education policy experts, consumer groups and lawmakers have said urgent action is needed to overhaul the student-loan market and reduce the burden on borrowers.

The Consumer Financial Protection Bureau, which has taken broad interest in student loans, is compiling information on how student loan burdens might affect the rest of the economy, as well as access to mortgage credit and automobile loans.

"Consensus is growing about the potential student-debt domino effect on the economy," CFPB student loan ombudsman Rohit Chopra said via email. "When borrowers struggle to meet their student-debt obligations, there are implications for all of us."